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BRAZIL: Haddad Expects Congress Approval Of Spending Cut Plan This Year

BRAZIL
BulletEM BulletEmerging Market News
  • After noting earlier that finance minister Haddad expects the spending cut plan to be presented to Congress this week, the minister also said that he expects the measures to be approved by both houses this year. Senate leader Pacheco has noted the urgency of the plan, and said that it will be on the congressional agenda after tax reform in the coming days.
  • Separately, Valor International reports that economists are calling for a more radical spending control plan than the one outlined in the new fiscal framework. They question whether the 2.5% cap on spending growth is realistic as mandatory expenditures continue to rise well beyond this limit.
    • Despite stronger-than-expected IPCA-15 inflation data earlier, USDBRL remains little changed today, around 5.80, as the market continues to await confirmation of the fiscal plan.
    • Food prices jumped 1.3% m/m, while airfares also rose sharply, which along with rising CPI expectations increases risks of a further step up in the pace of Selic rate hikes ahead.
    • Our technical analyst notes that USDBRL is in consolidation mode, but that a bull cycle remains in play and a short-term pullback would be considered corrective. Support to watch lies at 5.6811, the 50-day EMA, while key resistance and the bull trigger is at 5.8750.
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  • After noting earlier that finance minister Haddad expects the spending cut plan to be presented to Congress this week, the minister also said that he expects the measures to be approved by both houses this year. Senate leader Pacheco has noted the urgency of the plan, and said that it will be on the congressional agenda after tax reform in the coming days.
  • Separately, Valor International reports that economists are calling for a more radical spending control plan than the one outlined in the new fiscal framework. They question whether the 2.5% cap on spending growth is realistic as mandatory expenditures continue to rise well beyond this limit.
    • Despite stronger-than-expected IPCA-15 inflation data earlier, USDBRL remains little changed today, around 5.80, as the market continues to await confirmation of the fiscal plan.
    • Food prices jumped 1.3% m/m, while airfares also rose sharply, which along with rising CPI expectations increases risks of a further step up in the pace of Selic rate hikes ahead.
    • Our technical analyst notes that USDBRL is in consolidation mode, but that a bull cycle remains in play and a short-term pullback would be considered corrective. Support to watch lies at 5.6811, the 50-day EMA, while key resistance and the bull trigger is at 5.8750.